Where are the big brands in solar?

In 2006, I was working at design firm IDEO on a research project for newly-IPO’d First Solar, who was interested in getting into the residential solar market. We talked to early adopters, tech luddites, installers, and everyone in between, to understand how they felt about home solar. Few people understood, and fewer cared – it was ugly, confusing, and niche. The market was measured in thousands of homes – it was by any definition, a cottage industry. First Solar went on to invest in SolarCity, but never really participated in the sector.

Fast forward a decade: In 2016, the industry installed nearly 3 gigawatts of residential solar in the US, many hundreds of thousands of homes, representing nearly $10 billion in market value. Most of these systems were built by companies that did not exist in 2006. The industry has grown up quite a bit, and today solar is one of the fastest growing parts of the economy. Recognizable brands are starting to emerge, financing has become commonplace, marketing is more sophisticated, and as in every other industry, software is eating the world.

So, why are there no big consumer brands in residential solar? With $10B up for grabs, the commodification of hardware, and prices down by at least a factor of three since 2006, where are the home services providers and product companies? AT&T? Comcast? Google? Apple? Amazon? Anyone? Even the consumer companies that produce solar panels – LG, Panasonic, and Sharp — have not really gotten “in” to solar. Their efforts are isolated manufacturing businesses within global conglomerates, with little ties to their strong consumer brands.

There are plenty of good reasons for the leading consumer brands to be interested in residential solar.

It’s big

It’s profitable (if you are not in the commodity business)

They have an unfair advantage that today’s biggest solar companies do not: customers.

These companies have already acquired millions of customers who are buying things, consuming content, and signing up for long-term services. They have deep data on those customers, have been in their homes and wallets for a long time. They have effective, nationwide sales, marketing, logistics, service, and operations teams. They could potentially slash the biggest remaining cost in residential solar – customer acquisition. And, today’s solar companies represent an emerging threat to them – everyone wants to own the home.

Many would argue that home solar is not conducive to a national strategy, and is destined to be a regional, long-tail industry. I believe that is true, as long as solar is delivered to homeowners as a construction project, and not a product. But, solar doesn’t have to be a project. And, the battle is ultimately going to come down to customer acquisition.

The real opportunity for the big brands lies in an integrated offering – another line-item on my bill, a quadruple- or quintuple-play. But, this time, an offer that saves, rather than costs me money.

There are two significant technology trends that have now made it possible for these companies to participate at scale, if they choose to:

The “productization” of solar – Microinverters and AC Modules have nearly succeeded in turning solar from a project into a product – making it possible to standardize offerings, and safe and easy for non-specialists to design and install a system. SunPower has moved much of their residential business to AC Modules because of these benefits. This is really the only way to scale the industry from hundreds of thousands of homes a year, to many millions.

Software-enabled solar – the tools to do remote evaluation, design, financing, and closing of solar deals have never been better. A decade ago, the state-of-the-art was an elaborate Excel spreadsheet. Today, you can go end-to-end in the cloud with offerings from Aurora Solar, Enact, Sighten, Helioscope and others. Technology from companies like Google and Geostellar avoid the need to get on the roof to quote. And, drones are coming.

So, the market is big, the timing is right, and the technology is there.